Gas-guzzling cars should pay &#163;1,800 road tax, say MPs

Road tax should be dramatically increased to £1,800 a year for the most polluting cars, a cross-party committee of MPs say in a report published today.

The Labour-dominated committee criticised the Chancellor, Gordon Brown, for not going far enough in his last Budget, which introduced a new higher rate of £210 of vehicle excise duty (VED) for the cars with the biggest engines, such as 4x4s, which produce the mostCO2 emissions.

The MPs on the Environment Audit Committee, chaired by the MP Tim Yeo, said that the Chancellor's duty rate on "Chelsea tractors" was too low to be effective and should be replaced by big increases in tax on motorists as suggested by the Sustainable Development Commission.

Work for the committee showed that when the purchase price and the CO2 emissions were taken into account, the VED on the biggest cars was proportionately about half that paid on the smallest cars.

A wealthy businessman being chauffeur-driven in a luxury Bentley Arnage R V8 auto, a petrol-driven saloon costing £160,203, will pay only 42p per gram of CO2. But the owner of a humble 1.3 litre Ford Ka costing £7,395 pays 68p per gram of CO2 and the driver of the 1.3 litre Toyota Yaris which costs £11,290 about 74p per gram of CO2.

"Tax differentials between higher- and lower-carbon cars must be made much wider if they are to drive market transformation," the committee said.

The progress in sales of the most fuel-efficient cars has been "miscroscopic". Sales in 2005 fell from 481 to 467 - about 0.02 per cent of the 2.5 million new cars sold that year. The figure was 188 for the first half of 2006.

They added it was imperative to take "bold" measures to help avert dangerous climate change, including add more to the cost of the most polluting cars by introducing differentials on VAT in addition to VED.

Their report will strengthen the case secretly being put to the Cabinet by Transport Secretary, Douglas Alexander, for legislation to allow ministers to introduce road pricing in cities and on trunk roads to combat congestion.

In a leaked memorandum dated 20 July to his cabinet colleagues, Mr Alexander said: "The main purpose of the Bill would be to support our efforts to cut congestion and improve public transport, particularly in the major cities outside London. It would also help to pave the way for a national road pricing scheme in the medium to long term."

Road pricing is being trialled but will not be introduced nationally until 2014 at the earliest. The committee criticised ministers for not speeding up the introduction of road pricing - which could raise a charge for motoring on every road in Britain - through black boxes on the dashboard and spy satellites.

Mr Alexander said: "I would propose reforming the current arrangements for approving local road pricing schemes, providing better targeted powers to ensure that schemes are consistent with a national framework and are inter-operable."

He added: "We are considering pilots on the trunk-road network as an important stage towards national road pricing."

The MPs call on the Transport Secretary to encourage a shift towards lower-carbon modes of transport, and to discourage "marginal car and plane journeys" by imposing higher taxes.

They accuse the transport department of a "dismal failure of purpose" in combating carbon emissions and call for a national road-user charging scheme to combat CO2 emissions, rather than congestion. It is "scandalous", they say, that governments have failed to adopt higher aviation taxes or VAT on international air tickets.

Mr Yeo said: "The Government should take much more decisive action to shift the balance of affordability more in favour of trains, buses and lower-carbon cars and lorries."

* British households may be given individual carbon audits to encourage them to do more to reduce their own contribution to global warming, Tony Blair said.